1996 (9) TMI 102 - HC - Income Tax

Summary

Issues Involved:
1. Validity of returns under section 139(4)(b) of the Income-tax Act.
2. Limitation period for orders under section 143(1) as per section 153 of the Act.
3. Right to appeal under section 246(1)(c) of the Act against orders under section 143(1).

Issue-wise Detailed Analysis:

1. Validity of Returns under Section 139(4)(b) of the Income-tax Act:

The assessee, Smt. Bhagwant Kaur, filed returns voluntarily for the assessment years 1963-64, 1964-65, and 1965-66. The returns were processed under section 143(1) of the Income-tax Act, 1961. The assessee later challenged these returns, claiming they were invalid under section 139(4)(b). The court noted that the returns, although filed voluntarily, were claimed by the assessee to be non est and invalid as they were not filed within the prescribed period under section 139(4)(b).

2. Limitation Period for Orders under Section 143(1) as per Section 153 of the Act:

The assessee also contended that the orders passed under section 143(1) were barred by limitation as per section 153 of the Act. The court recognized that the orders under section 143(1) were claimed to have been passed after the expiry of the limitation period prescribed in section 153. This formed one of the bases for the assessee's denial of liability to be assessed under the Act.

3. Right to Appeal under Section 246(1)(c) of the Act Against Orders under Section 143(1):

The primary issue was whether the assessee had the right to appeal against orders passed under section 143(1) by invoking section 246(1)(c). The court examined the provisions of section 246(1)(c), which allows an appeal if the assessee denies his liability to be assessed under the Act. The court noted that the mere filing of returns does not constitute an admission of liability. It emphasized that the assessee had no opportunity to deny liability before the Assessing Officer when orders were passed under section 143(1).

The court referred to previous judgments, including Rani Anand Kunwar v. CIT and Mohan Lal Khemka v. CIT, which supported the view that denial of liability could be raised at the appellate stage. The court concluded that the right of appeal should be construed liberally and that the denial of liability by the assessee, even if raised after the filing of returns, was sufficient to grant the right to appeal under section 246(1)(c).

The court rejected the Department's argument that the assessee, having voluntarily filed returns, could not deny liability. It held that the absence of a specific provision for appeal against section 143(1) orders did not preclude the assessee from appealing under section 246(1)(c) based on denial of liability.

Conclusion:

The court answered the question of law in favor of the assessee, stating that the appeals were maintainable under section 246(1)(c) of the Act. The matter was ordered to be heard on the merits, with no order as to costs.